THIS BLOG RATES THE S&P 500 BUY/SELL/OR HOLD EACH DAY WITH 2-GOALS FOR LONG TERM INVESTMENTS: (1) PRESERVE CAPITAL (2) BEAT THE S&P 500.
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Thursday, May 26, 2016

“Jobless claims fell for a second week, indicating the
surge at the start of May reflected temporary dismissals. Initial applications
for unemployment benefits dropped by 10,000 to 268,000 in the week ended May 21…”
Story at…

DURABLE GOODS ORDERS
(Reuters)"Orders for long-lasting U.S. manufactured goods surged in
April on strong demand for transportation equipment and a range of other
products, but continued weakness in business spending plans suggested the
manufacturing rout was far from over…durable goods, items ranging from toasters
to aircraft meant to last three years or more, jumped 3.4 percent last month…”
Story at…

“Jeffrey Gundlach, founder of DoubleLine Capital, doesn’t
have a lot of faith in the recent two-day surge for equities…

‘The market has
been going sideways for 18 months, and when it breaks, either up or down, it
should be a large move. So let the market prove itself. If it breaks to the
upside, which I define as accelerating above 2,200, it is a good, low-risk, ‘go
with’ buy.’” – Jeffery Gunlach.Story
at…http://www.marketwatch.com/story/heres-what-gundlach-thinks-the-sp-500-needs-to-do-to-prove-itself-2016-05-25MARKET REPORT / ANALYSIS-Thursday, the S&P 500 finished basically unchanged
at 2090. -VIX dropped about 3% to 13.43.-The yield on the 10-year Treasury dropped to 1.82%.The 5-10-20 Timer issued a BUY signal yesterday.That is a simple system based on the 5-dEMA
and the 10-dEMA higher than the 20-dEMA.Indicators are mostly bullish and trending generally
higher, but the new-high, new-low data is not yet confirming an upswing. The
chart is the main issue now. Everyone is watching price action.Simply put, the S&P 500 needs to break
out higher to convince the bears that this is a bull market.MONEY TREND & SHORT TERM TRADINGThe short-term Money Trend indicator remains in an
uptrend, Thursday, and that’s clearly a bullish signal.In spite of that, I continue to hold short
positions mostly in SH and some in QID. Those will have to go if the market exceeds
my pain-target of 2110 on the S&P 500. MARKET INTERNALS (NYSE DATA) The 10-day moving average of the percentage of stocks
advancing (NYSE) climbed to 53.5% Thursday. It was 53.1% Wednesday. A number above
50% is usually GOOD news for the markets.On a longer term, the 150-day moving average of advancing
stocks improved to 51.7%. A value above 50% generally indicates an
up-trend.The McClellan Oscillator (a
Breadth measure) slipped some but remained positive – a bullish indicator in
the short-term. New-highs outpaced New-lows. The spread (new-highs minus
new-lows) was +74 Thursday. (It was +93 Wednesday).The 10-day moving average of the change in spread remained
minus-2. In other words, over the last 10-days, on average; the spread has decreased
by 2 each day. Market Internals remained
neutral on the markets, but they are nearly bullish.

Market Internals are a decent trend-following analysis of
current market action, but should not be used alone for short term trading.
They are usually right, but they are often late.They are most useful when they diverge from
the Index.In 2014, using these
internals alone would have made a 9% return vs. 13% for the S&P 500 (in on
Positive, out on Negative – no shorting).Of course, few trend-following systems will do well in an extreme
low-volatility, nearly straight-up year like 2014.

TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATIONOn 30 Dec I reduced my invested position in my retirement
account to 30% invested in stocks thru an S&P 500 Index fund (“C”-fund in
the TSP) and on 15 Jan I reduced stock allocation to zero in long-term
accounts. If the S&P 500 index closes
above 2110, I plan to add to my stock allocation.The S&P 500 peaked in Mid-May 2015 and has not been
able to break higher in the past 12-months. That looks like a top to me. See
“Why the Bull Market May be Dead” in my 14 December blog at…http://navigatethestockmarket.blogspot.com/2015/12/stocks-are-topping-time-to-sell-hussman.html

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About Me

I am an engineer with a lifelong interest in "playing with numbers" so what could be more fun than trying to develop a system that beats the stock market? Well, lots of things, but I decided to do this anyway.
While I am not a finance-professional, or professional investor, I have developed some skills.
I competed in two CNBC Million Dollar Portfolio contests finishing in the top 4% in 2008 (34,320th of 800,000) and the top 0.1% (448th of 500,000) in 2009. More importantly, I managed to sell out of my retirement accounts at or near the top in 2000 and 2007 and bought close enough to the bottom that I didn’t lose too much sleep. (Even Bill Gates lost SOME sleep.)
I hope that my thoughts will help you achieve your investing goals. Please remember that my ideas are free and there may be times when my ideas are worth less than what you paid.